USD/JPY: Volatile trading extends but to the downside in Asia
03.01.2023, 02:38

USD/JPY: Volatile trading extends but to the downside in Asia

  • USD/JPY hit fresh six-month lows below 130.00 in Asia this Tuesday.
  • The Japanese yen rallied on BoJ speculation and negative Asian stock markets.
  • The US Dollar rebound cushions the downside in USD/JPY ahead of US PMI.

USD/JPY is under intense selling pressure near the 130.00 level, having hit fresh six-month lows at 129.82 in the last hour. The sudden downturn got triggered after the pair faced rejection at daily highs of 131.40, witnessing a wild swing of around 160 pips in a couple of hours.

The Japanese yen sees massive inflows

The downswing in the pair was mainly triggered by a fresh spurt of the Japanese Yen buying, as the US equity futures skidded at the open and bolstered the safe-haven flows into the Yen. Moreover, speculation surrounding the potential for a hawkish pivot by the Bank of Japan (BoJ) to tackle inflation could be attributed to the massive JPY strength in early trades.  

Lower liquidity due to a public holiday in Japan also exaggerated the moves in the major. Looking ahead, the US S&P Global Manufacturing PMI will be eyed, as it’s the first macroeconomic release out of the US at the start of 2023. Although the US Federal Reserve December meeting minutes, due on Wednesday, will grab attention, as it would show many members saw risks that interest rates would need to go higher for longer.

USD/JPY: Technical levels to consider

 

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